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One credit union’s bid to boost branch traffic — with help from Amazon

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Tinker Federal Credit Union is hoping the world’s biggest retailer can help bring new members into the fold.

The Oklahoma City-based institution has allowed Amazon to install sets of the retailer’s lockers in seven Tinker branches. Amazon customers can pick up packages there rather than having the items shipped to a home address, and make returns to these locations.

It’s the latest strategy employed by a credit union to bolster foot traffic at the branch and endear the institution to potential members. The move could work, though experts said any credit union utilizing this strategy needs to think about how they train staff to handle these consumers stopping by for a matter unrelated to banking.

“There is inherent consumer gratitude toward any retailer that makes their life a bit easier,” said Steven Reider, president of Bancography, a consulting firm. “Running to the post office or FedEx is no fun. Consumers will remember if you do this favor for them.”

The $4.1 billion-asset CU decided to offer the Amazon lockers because of the online retailer’s reach, said Matthew Downing, Tinker’s manager of research and delivery. There were an estimated 105 million Amazon Prime users in the U.S. in June, according to Statista.

Amazon handled the logistics of installing the lockers, including sending workers to Tinker facilities to determine which locations would work, Downing said. The lockers were mostly installed outside of the branches, which helps with security and ensures Amazon customers have 24-hour access to their packages.

Though Amazon isn’t paying Tinker for the space, the credit union does get to include advertisements in the emails the company sends out to consumers regarding their packages.

Management primarily views the lockers as an opportunity to get increase foot traffic at Tinker’s locations. The credit union is currently building a new branch and that space will include both lockers and a café, another feature that financial institutions are trying as a method to attract more in-person visits.

“You see a lot of financial institutions trying to come up with creative and unique reasons for consumers to come to a brick-and-mortar location,” Downing said. “There are a variety of ways that we can get consumers to come inside and this is just one of the tools.”

Back to the branch

As digital banking options have expanded, consumers have been completing more transactions remotely and visiting branches less often. Among financial institutions with less than $1 billion in assets, 41% said they expect between 1% and 5% of transactions per year to migrate from being completed with a teller to a self-service channel over the next five years, according to a 2017 survey of U.S. banks and credit unions from research and consulting firm Celent.

At the same time, Celent found, ATM transaction volume hasn’t dropped. Forty-six percent of respondents said that mobile deposit hasn’t changed ATM traffic and 22% said ATM transaction volume has only seen a drop of between 1% and 3%.

That means basic transactions normally done at the teller are being displaced by digital banking, rather than ATM visits, said Bob Meara, senior analyst in the banking group for Celent.

Financial institutions have both embraced and worried about the rise of digital banking and the subsequent drop in branch traffic. Having basic transaction completed remotely helps cut down on costs but also eliminates opportunities for staff to interact with members and potentially sell them other products.

“That ambition is held pretty broadly — increase foot traffic,” Meara said. “Digital banking reduced branch traffic but now credit unions are trying to figure out how to get some of that back.”

Credit unions have turned to a variety of strategies to draw people back to the branch. For instance, Nutmeg State Financial Credit Union in Rocky Hill, Conn., has opened DMV Express centers in two of its branches with workers providing both banking and DMV services.

In general, getting a consumer in the door can lead to further sales, according to Jeff Winter, senior vice president of marketing at NewGround, a firm that works on designing and building spaces. A study from First Insight found that 71% of consumers spent at least $50 when shopping in-store compared with just 54% of those buying items online.

Because of that, it’s likely Tinker’s decision to install the Amazon lockers will be beneficial in expanding their brand recognition, signing up new members and getting additional chances to sell more products to existing members, experts said.

Industry observers likened the move to clothing retailer Kohl’s – one of Amazon’s direct competitors – accepting the online retailer’s returns to get more consumers into their stores.

"It is clever,” Reider said. “Anything that builds traffic means awareness and helps foster the consumer associating the credit union with their normal routine. The next time they are in the market for a checking account they will remember that they visit that branch once week anyway to pick up Amazon packages, so they may go there.”

However, the effectiveness of the lockers could boil down to how a credit union’s staff handles the additional foot traffic. That should include training for branch staff so they know how to approach and address any potential new members that stop by because of the lockers. It may also require a cultural shift if employees are more used to processing transactions rather than approaching and engaging with consumers, Winter said.

“You can have the most beautiful new branch and the worst performing staff in that branch, and it will still be one of your worst performing branches,” Winter said.

Employees also shouldn’t approach those picking up packages with a hard sell of a banking product, experts said. Instead, it’s a chance for potential members to see the credit union’s rates or products advertised on signage, that the location is convenient, and that staff is friendly.

Tinker doesn’t plan on having staff approach consumers coming to pick up packages, Downing said. Instead, it’s an indirect way for the public to see what the credit union has to offer.

The first set of lockers was installed in September so it’s still too early to tell if they are making a difference, though the credit union is planning to track key metrics, Downing said. It also plans on having lockers installed at four more locations by the end of the year.

“[The initiative] is more to say, ‘We are here when you need us,’ and build brand awareness,” he added.

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